Brookfield's Bruce Flatt: Billionaire Toll Collector Of The 21st Century

Just off a 14-hour commercial flight from Dubai,
Brookfield Asset Management chief Bruce Flatt stares into a gaping hole in the ground that looks like open-heart surgery performed on an entire city block in Manhattan. Piles of beams, mazes of scaffolding and even active railroad tracks crisscross each other endlessly.

"The amount of steel here is enormous," Flatt shouts over a cacophony of honking car horns, grinding cement mixers and moving cranes at one end of the notoriously clogged Lincoln Tunnel. More than 17.2 million pounds of steel, to be precise, enough to anchor a 67-story glass office tower. Two more towers are also going up, along with a 30-floor boutique hotel and a 16-story trapezoidal glass office building with 26-foot-high ceilings and floors the size of football fields--much of it suspended over railroad yards. Dubbed Manhattan West, this 7-million-square-foot, $5 billion project encompasses two square city blocks.

And yet it's completely invisible in the public consciousness--the vast majority of New Yorkers have never heard of it. Most people assume it's part of the adjacent Hudson Yards development, a $25 billion project from billionaire Stephen Ross and his Related Companies that will feature 16 skyscrapers and 18 million square feet.

That's fitting. The high-profile Stephen Ross has an oceanfront Palm Beach mansion, owns the Miami Dolphins and travels in the same circles as Donald Trump. Bruce Flatt is an accountant from Manitoba who lives in a quiet Toronto neighborhood and often commutes by subway.

But if you're comparing their portfolios? It's not even close. Brookfield quietly owns entire city skylines in places like Toronto and Sydney. It's the biggest office landlord in London and downtown Los Angeles. In Berlin it owns Potsdamer Platz and, in London, Canary Wharf, two of the biggest real estate developments in Europe. It has 14,200 hotel rooms, including Atlantis in the Bahamas and the Diplomat in Florida, and scores of shopping malls courtesy of divisions like Rouse Properties and General Growth, and several high-end Brazil shopping centers. In all, Brookfield owns some 400 million square feet of commercial space.

And that's just the real estate. Flatt's true passion is infrastructure, which he sees as a $35 trillion opportunity that, like Manhattan West, is hiding in plain sight. "Infrastructure will be an enormous asset class for institutional investors in the coming 25 years," Flatt insists.

Brookfield owns 218 hydroelectric plants on 82 river systems in North and South America. In France, Brookfield has the largest independent owner of cell towers. In Chile its electric power lines serve 98% of the population. In Ireland it owns 20% of the country's wind-farm capacity. It owns 36 ports in the U.K., North America, Australia and Europe, and in India and South America it manages 3,600 kilometers of toll roads. All told, Brookfield has 2,000 projects across 30 countries on five continents, encompassing $250 billion in assets and 70,000 employees. President Trump talks about an infrastructure plan--Bruce Flatt is actually executing one.

And Wall Street loves it. Despite Brookfield's low profile, its stock has returned 1,350% since Flatt took the helm in 2002, versus 183% for the S&P 500--that's a Buffettesque 19% annual average, buoyed by assets that generated some $25 billion in revenues last year and net profits of $3.3 billion. With a $36 billion market cap, Brookfield is the size of KKR, Apollo, Carlyle Group and Colony Northstar combined. "Bruce is not afraid to make large bets when he sees an opportunity," says Jonathan Gray, Blackstone's real estate chief and a possible heir to Stephen Schwarzman. "He buys high-quality, long-duration assets--be they pipelines or electric grids or large pieces of real estate. Between the combination of yield and appreciation, they generate strong returns over time." At 51, Flatt just joined the Forbes Billionaires list, with a net worth of $1.3 billion.

Flatt has been called Canada's Warren Buffett not only because he's a contrarian, long-term investor but also because his investment strategy relies less on price than on patience and the power of compounding income streams. "We will pay more for quality because in the fullness of time, real assets will generally always go up in value," Flatt says. "We'd rather earn a 12% to 15% net return over 20 years than a 25% return over three."

In fact, if ever there were a collection of sleep-well-at-night investments that might one day rival the safe-haven status of U.S. Treasury bonds or gold, you could argue that it's the well-diversified trove of real assets in Brookfield's $250 billion portfolio. It's essentially a call on the future of civilization itself. And it's about to get far bigger.

Photograph by Franco Vogt

Forbes cover, May 2017.

IF FLATT IS TRYING to cultivate the Buffett comparisons, his Toronto digs certainly encourage it. Modest home? He lives in a two-story brick townhouse barely set back from the sidewalk. Humble office? A drab gray cubicle, positioned against a window looking onto a courtyard of an office complex that Brookfield owns. Contrarian outlook? The only piece of art visible from Flatt's desk is a framed cartoon depicting a herd of white sheep moving toward a cliff as a single black sheep heads in the opposite direction.

His break came early. His father was an executive at a mutual fund company in Manitoba, and Flatt, numerically inclined, joined an accounting firm in Toronto out of college.

In 1990, at 25, he was hired at Brascan, a conglomerate controlled by Peter and Edward Bronfman, two heirs to the Seagram fortune. He eventually rose to become vice president of its merchant bank and gained a seat in the engine room of one of Canada's largest companies, with holdings like Labatt Beer, the Toronto Blue Jays, a minority stake in real estate developer Trizec Properties and millions of acres of timberland. Then came trouble. Brascan's interests were built by Peter Bronfman and a South African investor named Jack Cockwell, who financed its ambition through a web of intermingled corporate holdings. The structure faltered during the early 1990s downturn, and troubled Brascan was forced to sell its beer, baseball and forestry interests.

Flatt and a number of young partners--mostly accountants--began to rebuild Brascan. Its stock was deeply depressed, and by the mid-1990s Bronfman had stepped aside, selling his shares to a partnership that distributed stock to the company's upper ranks. For Flatt, it was a billion-dollar opportunity: By borrowing, he was ultimately able to gain control of a large number of shares with a chance for immense wealth if he and his partners could devise a better strategy.

Having seen the hazards of corporate overreach, Flatt forged an investing style to capitalize on the miscalculations of others. "We were young in our careers and watched very difficult markets in the late 1980s and early 1990s," he says. "That was quite impressionable on us to how we run the business today--never put yourself in a situation where you have to sell something in an environment where you should be buying."

The opportunity came quickly for Flatt, who focused on Brascan's real estate interests. Another humbled Canadian giant, Olympia & York, filed for bankruptcy in 1992 after heavy losses in developing London's Canary Wharf. Flatt scooped up O&Y senior debt and organized a plan with creditors, including Hong Kong billionaire Li Ka-shing, beating out Apollo and Tishman Speyer. When the dust settled, Flatt controlled the World Financial Center, properties in midtown and Boston, and a block on the West Side of Manhattan that he would sit on. Flatt listed the real estate trove on public markets in 1997 under the name Brookfield Properties. He then proceeded to buy out his minority partners. The stock quickly soared, reviving parent Brascan.

History repeated ahead of the next downturn. On 9/11, Flatt sprang into action, first reassuring investors that the World Financial Center had been mangled but not toppled. Then he hopped in a limousine and traveled from Toronto to Lower Manhattan to check on his workers and buildings. Alongside executives like John Zuccotti, a former deputy mayor of New York, Flatt and his team organized a months-long cleanup. When the crisis passed, he was anointed CEO by Brascan's partnership, capping a dramatic ascent for the 36-year-old.

Once in charge, Flatt streamlined Brascan's sprawling operations into three lines: real estate, renewable energy and infrastructure. On top of these divisions would sit an asset-management unit to invest outside funds--including coinvestments from sovereign wealth funds--designed to generate fees and have capital ready for market dislocations.

And those dislocations kept coming. After the Enron debacle, for example, Flatt's renewable-energy business acquired hundreds of hydroelectric plants across the northeast. By 2005, Flatt decided to rebrand the whole Brascan operation under the Brookfield name.